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Analyzing the Impact of Health and Education on Total Factor Productivity: A Panel Data Approach

Shahzad Alvi () and Ather Maqsood Ahmed
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Ather Maqsood Ahmed: National University of Sciences & Technology, Islamabad

Indian Economic Review, 2014, vol. 49, issue 1, 109-123

Abstract: This study examines the impact of health and education on total factor productivity (TFP) by using panel data for the period 1990-2010 for thirty-seven developed and developing countries. In a two-step approach, the Cobb-Douglas production function is estimated initially to calculate TFP. In the second step, the determinants of TFP have been estimated by paying special attention to indicators of health and education. The study uses information on life expectancy as indicator of health and average years of schooling as indicator of education. Common, Random and Fixed Effects modeling approach has been applied. The study finds that the indicator of health has positive, robust and significant impact on TFP whereas the impact of education has been found to be positive and significant. These findings reconfirm the need for improving health and education of the general populace to ensure sustainable growth and economic development. In fact, the study recommends that the developing world which is lagging behind developed nations need to prioritize this effort on urgent basis.

Keywords: Cobb Douglas Production Function; Total Factor Productivity; Life Expectancy; Common Effects; Random Effects and Fixed Effects (search for similar items in EconPapers)
JEL-codes: I15 I25 (search for similar items in EconPapers)
Date: 2014
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